<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Salomon Inc
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Salomon Inc
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
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(4) Proposed maximum aggregate value of transaction:
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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- ---------------
(1)Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE> 2
SALOMON INC
SEVEN WORLD TRADE CENTER, NEW YORK, NEW YORK 10048 212 783-7000
Robert E. Denham
Chairman and
Chief Executive Officer
March 22, 1995
Dear Stockholder:
Attached are materials related to the annual meeting of stockholders, to be
held in New York on May 3.
I encourage you to attend the annual meeting. The annual meeting provides
an opportunity for shareholders to question management about issues of
significance to the Company. By actively participating with thoughtful
questions, you can contribute to the quality of the meeting.
Sincerely,
ROBERT E. DENHAM
----------------
ROBERT E. DENHAM
<PAGE> 3
SALOMON INC
SEVEN WORLD TRADE CENTER, NEW YORK, NEW YORK 10048 212 783-7000
NOTICE OF 1995 ANNUAL MEETING OF STOCKHOLDERS
March 22, 1995
To Our Stockholders:
The Annual Meeting of Stockholders of Salomon Inc will be held in the
Salomon Brothers Auditorium, Seven World Trade Center, New York, New York, on
Wednesday, May 3, 1995, at 10:00 a.m. for the following purposes:
1. To elect directors, and
2. To transact such other business as may properly come before the
meeting.
The record date for the determination of the stockholders entitled to vote
at the meeting or at any adjournment thereof is the close of business on March
15, 1995.
All stockholders are urged to attend the meeting. However, in order to make
sure that your shares are represented at the meeting, you are requested to sign,
date and return the enclosed proxy promptly in the accompanying envelope, which
requires no postage if mailed in the United States. This will not limit your
right to vote in person.
By Order of the Board of Directors
ARNOLD S. OLSHIN
Secretary
<PAGE> 4
SALOMON INC
SEVEN WORLD TRADE CENTER, NEW YORK, NEW YORK 10048 212 783-7000
PROXY STATEMENT FOR THE 1995
ANNUAL MEETING OF STOCKHOLDERS
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy, being mailed to the stockholders on or about March 22,
1995, is solicited by the Board of Directors of the Company. If a proxy is duly
received by the Secretary before the meeting, the shares represented by it will
be voted on all matters to be acted upon at the meeting unless the proxy is
revoked by written notice to the Secretary of the Company before the meeting or
by voting by ballot at the meeting.
Holders of the Company's Series A Cumulative Convertible Preferred Stock
(the "Preferred Stock, Series A") and Common Stock as of the close of business
on March 15, 1995 will be entitled to receive notice of and to vote at the
meeting and any adjournment thereof. On that date, there were outstanding and
entitled to vote 700,000 shares of Preferred Stock, Series A, each of which is
entitled to 26.31579 votes with respect to each matter to be voted on at the
meeting, voting together with the holders of the Common Stock, and 106,083,360
shares of Common Stock (exclusive of 49,547,511 shares held in the treasury) of
the Company, each of which is entitled to one vote with respect to each matter
to be voted on at the meeting. The presence at the meeting in person or by proxy
of the holders of Preferred Stock, Series A, and Common Stock holding in the
aggregate a majority of the outstanding shares of the Company's stock entitled
to vote shall constitute a quorum for the transaction of business. All matters
to be acted upon at the meeting shall be approved by the affirmative vote of a
majority of the votes cast. Abstentions and broker non-votes will count for
purposes of establishing a quorum but will not count as votes cast.
The cost of soliciting proxies in the form enclosed will be borne by the
Company. In addition to the solicitation by mail, proxies may be solicited
personally or by telephone by employees of the Company. The Company will
reimburse brokers holding stock in their names, or in the names of their
nominees, for their expenses in sending proxy material to the beneficial owners
of such stock.
1. ELECTION OF DIRECTORS
Ten directors are to be elected at the Annual Meeting, each to serve for
one year and until his or her successor is elected and qualifies. All of the
nominees indicated below are presently members of the Board of Directors. In the
event any one or more of the following nominees are unable to serve, it is the
intention of the persons named in the proxy to vote for the election of
substitutes proposed by the Board of Directors or, if no substitute is proposed,
for the remaining nominees. The Board of Directors has no reason to believe that
any of the nominees will be unable to serve.
<PAGE> 5
Information follows with regard to the nominees and their principal
occupations during the past five years and board and committee memberships.
- --------------------------------------------------------------------------------
DWAYNE O. ANDREAS
Mr. Andreas, age 77, has been Chairman of the Board and Chief Executive of
Archer Daniels Midland Company, a processor of agricultural products, for more
than five years.
Mr. Andreas has been a director of the Company since 1982 and is currently
Chairman of the Nominating Committee.
- --------------------------------------------------------------------------------
WARREN E. BUFFETT
Mr. Buffett, age 64, has been Chairman of the Board and Chief Executive Officer
of Berkshire Hathaway Inc., a holding company, for more than five years.(1) He
also served as interim Chairman and Chief Executive Officer of the Company
between August 18, 1991 and June 3, 1992 and interim Chairman and Chief
Executive Officer of Salomon Brothers Inc between August 18, 1991 and May 27,
1992. Mr. Buffett is also a director of Capital Cities/ABC, Inc., The Coca-Cola
Company, The Gillette Company and USAir Group, Inc.
Mr. Buffett has been a director of the Company since 1987 and is currently
Chairman of the Executive Committee.
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ROBERT E. DENHAM
Mr. Denham, age 49, has been Chairman and Chief Executive Officer of the Company
since June 1992, after serving as General Counsel of the Company from September
1991. Prior thereto, he was a partner in the law firm of Munger, Tolles & Olson,
Los Angeles, California for more than three years. He rejoined Munger, Tolles &
Olson as a partner in August 1992 and resigned from that firm on December 31,
1993.
Mr. Denham has been a director of the Company since 1992 and is currently a
member of the Executive Committee.
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CLAIRE M. FAGIN
Dr. Fagin, age 68, has been Leadership Professor and Dean Emeritus, School of
Nursing, University of Pennsylvania, since 1992. Prior thereto, she was
Professor and Margaret Bond Simon Dean, School of Nursing, University of
Pennsylvania, for more than five years. She also served as Interim President of
the University of Pennsylvania from 1993 to 1994. Dr. Fagin is also a director
of CMAC Investment Corporation and Provident Mutual Life Insurance Company.
Dr. Fagin has been a director of the Company since 1994 and is currently a
member of the Audit and Compliance Committee.
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GEDALE B. HOROWITZ
Mr. Horowitz, age 62, has been an Executive Vice President of the Company for
more than five years.
Mr. Horowitz has been a director of the Company since 1981.
- --------------------------------------------------------------------------------
2
<PAGE> 6
DERYCK C. MAUGHAN
Mr. Maughan, age 47, has been an Executive Vice President of the Company since
May 1993. Additionally, he has been Chairman and Chief Executive Officer of
Salomon Brothers Inc since May 1992, after having served as its Chief Operating
Officer from August 1991. Prior thereto, he served as a Vice Chairman of Salomon
Brothers Inc from January 1991 and as Chairman of Salomon Brothers Asia Limited
from 1986 to 1991.
Mr. Maughan has been a director of the Company since 1991.
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WILLIAM F. MAY
Mr. May, age 79, has been Chairman and Chief Executive Officer of Statue of
Liberty-Ellis Island Foundation, Inc. for more than five years. Mr. May is also
a director and a member of the compensation committee of U.S. Surgical
Corporation.
Mr. May has been a director of the Company since 1978 and is currently a member
of the Executive Committee, the Compensation and Employee Benefits Committee and
the Audit and Compliance Committee.
- --------------------------------------------------------------------------------
CHARLES T. MUNGER
Mr. Munger, age 71, has been Vice Chairman of the Board of Berkshire Hathaway
Inc. for more than five years.(1) He is also Chairman and a director of Daily
Journal Corporation, Chairman and a director of Wesco Financial Corporation and
a director of USAir Group, Inc.
Mr. Munger has been a director of the Company since 1987 and is currently a
member of the Audit and Compliance Committee, the Compensation and Employee
Benefits Committee and the Nominating Committee.
- --------------------------------------------------------------------------------
LOUIS A. SIMPSON
Mr. Simpson, age 58, has been President and Chief Executive Officer-Capital
Operations and a director of GEICO Corporation, an insurance organization, since
May 1993 after having served as Vice Chairman of the Board of GEICO Corporation
for more than five years. He is also a director of Potomac Electric Power
Company and Pacific American Income Shares, Inc.
Mr. Simpson has been a director of the Company since 1993 and is currently
Chairman of the Audit and Compliance Committee and a member of the Executive
Committee.
- --------------------------------------------------------------------------------
ROBERT G. ZELLER
Mr. Zeller, age 76, has been retired since 1979 after serving as Chairman of the
Board and Chief Executive Officer of F. Eberstadt & Co., Inc., investment
bankers. Mr. Zeller is also a director and a member of the compensation
committee of Rykoff-Sexton Corp.
Mr. Zeller has been a director of the Company since 1967 and is currently
Chairman of the Compensation and Employee Benefits Committee and a member of the
Executive Committee and the Audit and Compliance Committee.
- --------------------------------------------------------------------------------
(1) For information with respect to Berkshire Hathaway Inc., see "Information as
to Certain Stockholdings" below at Page 6.
3
<PAGE> 7
BOARD OF DIRECTORS' ROLE, MEETINGS, COMMITTEES AND FEES
ROLE. The business of the Company is managed under the supervision of the Board
of Directors. The Company's by-laws provide that, subject to the direction of
the Board, the Chairman shall have the general and active management of the
Company's business. The Board has adopted a policy pursuant to which the
Chairman should be a business-wise, shareholder-oriented person who does not
have personal dependence on or loyalty to management personnel of any of the
principal subsidiaries of the Company by virtue of long service with any of
those organizations. He is responsible, among other things, for organizing Board
process and information flow so that the Board can effectively perform its
functions.
A key function of the Board is the appointment and evaluation of senior
officers who have the direct responsibility for conducting or supervising the
business of the Company and its principal subsidiaries. The Board specifically
articulates objectives for the Chairman and evaluates his performance against
them. In addition, together with the Chairman, it sets objectives for the Chief
Executive Officer of Salomon Brothers Inc and evaluates his performance in light
of these objectives.
The Board believes that its primary responsibility is to see that the
Company is managed in the long-term interests of shareholders. The Board
discharges this responsibility by meeting directly or through its committees
with senior management to discuss, review and, where appropriate, approve
policies and actions relating to significant issues including: (i) maintaining
high standards for compliance and for ethical behavior toward customers and
counterparties, (ii) determining the amount and structure of capital, (iii)
maintaining appropriate risk management systems, (iv) developing and applying
pro-shareholder compensation systems, and (v) providing fair reporting to
shareholders about the Company and its results.
MEETINGS AND COMMITTEES. The Board of Directors of the Company held seven
meetings in 1994. The Executive Committee of the Board of Directors held no
meetings during the year. The Company's By-Laws provide that the Executive
Committee may exercise most of the powers of the Board in the general and active
management of the business and affairs of the Company.
In addition to the Executive Committee, the standing committees of the
Board of Directors include the Audit and Compliance Committee, the Compensation
and Employee Benefits Committee and the Nominating Committee.
The Audit and Compliance Committee, which consists entirely of nonemployee
directors, holds regular meetings at which the Company's independent accountants
and its internal auditors report directly to the Committee. The Audit and
Compliance Committee monitors and provides oversight with respect to the
Company's accounting policies, internal accounting controls and the scope and
results of the independent accountants' examination of the financial statements.
Additionally, the Audit and Compliance Committee establishes and reviews
policies and their administration with respect to the compliance of the Company
and its subsidiaries with regulatory and internal procedures and requirements
and the Committee receives regular reports on regulatory and compliance matters
from the Company's General Counsel. While it is inevitable that there will be
instances in which such procedures or requirements are not fully met, the
Committee seeks to minimize the risk that regulations and compliance policies
are not followed. The Audit and Compliance Committee held nine meetings in 1994.
The Compensation and Employee Benefits Committee establishes corporate
policy on the compensation of officers and key employees of the Company. The
report of the Compensation and Employee Benefits
4
<PAGE> 8
Committee regarding the 1994 compensation policies applicable to the Company's
executive officers, including the specific relationship of corporate performance
to executive compensation, is set forth below at Page 12. The Compensation and
Employee Benefits Committee consisted in 1994 entirely of nonemployee directors
and held nine meetings in that year.
The Nominating Committee considers and makes recommendations to the Board
with respect to the size and composition of the Board and candidates for
membership on the Board. The Board has directed the Nominating Committee to
consider for nomination to the Board persons with the following qualities: (1)
Owner-oriented. The director should be overwhelmingly focused on promoting the
interests of owners. Generally this owner-orientation is likeliest to be found
in individuals who have an investment in Salomon's Common Stock that is
significant to them. (2) Business-wise. The director should be highly talented
in thinking about business issues in a creative and cooperative way and should
be able to react quickly and with sound judgment to business ideas. He or she
should be able and willing to express himself/herself effectively (and
forcefully, if needed) on issues discussed by the Board. (3) Time Commitment.
The director should be willing to make a sufficient time commitment to be an
effective director, including likely service on at least one Board Committee.
In considering candidates for Board vacancies, the Committee intends to
make a wide canvass of possible nominees, including women and persons of diverse
racial and cultural backgrounds. The Board believes that its procedure for
seeking board members and the qualifications it has set for Board service should
over time produce a strong and diverse board membership. Although the Committee
has not established procedures for the submission by shareholders of proposed
candidates for its consideration, the Committee will consider a candidate when
accompanied by sufficient, reliable information on the candidate. The Nominating
Committee held two meetings in 1994.
ATTENDANCE. In 1994, all of the directors of the Company attended at least 75%
of the aggregate number of meetings of the Board and meetings of Committees of
the Board on which they served.
FEES. Each nonemployee director is entitled to an annual retainer of $30,000.
In addition, the following directors' fees have been set: a $2,000 attendance
fee for each board meeting and a $1,000 attendance fee for each committee
meeting attended (if a director attends more than two committee meetings on the
same day or if a committee meeting is held on the same day as a board meeting,
only $2,000 is paid); a $3,000 annual retainer for each committee member and a
$2,000 additional annual retainer to each chairman of a committee. A deferred
compensation plan for nonemployee directors permits participants to elect on or
before December 31 of each year to have all or a portion of the following year's
compensation deferred, with such deferred compensation accruing interest at a
rate equal to the prime rate calculated on a quarterly basis and payable with
such interest on a deferral date selected by the participant. Additionally, on
December 7, 1994, the Board of Directors approved a synthetic equity plan for
nonemployee directors. The plan permits such directors to elect on or before
December 31 of each year to have all or a portion of the following year's
compensation deferred, which compensation is converted at year-end into phantom
shares of Common Stock of the Company at the average of quarter-end prices
during the year. The period of deferral is the earlier of five years or
cessation of Board membership. At the end of such deferral period, participants
receive a dollar amount equal to the value of a share of Common Stock on such
day multiplied by the number of phantom shares of Common Stock credited to their
accounts. Directors who are employees of the Company are not entitled to an
annual retainer or to any attendance fees or fees for service on a committee.
5
<PAGE> 9
INFORMATION AS TO CERTAIN STOCKHOLDINGS
The following are the only persons known to the Company who own
beneficially more than five per cent of any class of the Company's voting
securities as of March 1, 1995:
<TABLE>
<CAPTION>
TITLE OF SHARES PER CENT
CLASS BENEFICIALLY OF CLASS
OF STOCK OWNED OF STOCK
------------------- ------------- ---------
<S> <C> <C> <C>
Berkshire Hathaway Inc.(1)(2)........... Common 6,633,600 6.3
and affiliates Preferred, Series A 700,000 100.0
1440 Kiewit Plaza
Omaha, Nebraska 68131
Dart Financial Corporation.............. Common 7,698,400(3) 7.3
and affiliates
c/o First Interstate Bank of Nevada N.A.
Trust Department
3800 Howard Hughes Parkway
Suite 200
Las Vegas, Nevada 89109
</TABLE>
- ---------------
(1) The Company has been informed by Berkshire Hathaway Inc. ("Berkshire"), a
Delaware corporation, and by Warren E. Buffett, as follows: Berkshire is a
holding company, the capital stock of which is beneficially owned
approximately 40.7% by Warren E. Buffett and a trust of which he is trustee
but in which he has no beneficial economic interest and 3.1% by Mr.
Buffett's wife, Susan T. Buffett. Additionally, approximately 1.6% of such
capital stock is beneficially owned by Charles T. Munger. Mr. Buffett may be
deemed to control Berkshire and thus to own beneficially the Company's stock
owned beneficially by it. As of March 1, 1995, Berkshire owned beneficially
(and, through wholly- or majority-owned subsidiaries, owned of record)
700,000 shares of Preferred Stock, Series A, of the Company, which shares
are entitled to 18,421,053 votes, constituting approximately 14.8% of the
votes entitled to be cast by the outstanding voting securities of the
Company. The Preferred Stock, Series A, is convertible on the basis of
26.31579 shares of Common Stock for each share of Preferred Stock, Series A,
(subject to adjustment), or, in the aggregate, for 18,421,053 shares of
Common Stock. Under Berkshire's Stock Purchase Agreement, dated September
27, 1987, with the Company, pursuant to which affiliates of Berkshire
acquired the Preferred Stock, Series A, (the "Purchase Agreement"), the
Company undertook to use its best efforts to nominate and elect Messrs.
Buffett and Munger, or two other Berkshire representatives, to the Company's
Board of Directors. For a description of the other terms of the Purchase
Agreement, see "Compensation Committee Interlocks and Insider Participation"
below at Page 11.
(2) Included are 401,000 shares of Preferred Stock, Series A, constituting
approximately 8.5% of the votes entitled to be cast by the Company's
outstanding voting securities, owned of record by National Indemnity
Company, a wholly-owned subsidiary of Berkshire. As of March 1, 1995,
National Indemnity Company also owned all of the shares of the Company's
Common Stock which are shown as beneficially owned by Berkshire.
(3) Does not deduct an aggregate of 7,585,400 shares of the Company's Common
Stock, representing 7.2% of outstanding Common Stock, reported by Dart
Financial Corporation as "shares sold short" on March 4 and March 28, 1994.
The following is the ownership, as of March 1, 1995, of shares of Common
Stock and Preferred Stock, Series A, of the Company by all directors, nominees
for director, the Executive Officers named in the table on
6
<PAGE> 10
Page 9 and the ownership as of such date by Executive Officers and directors of
the Company as a group. Common Stock which is referred to as "beneficially
owned," and the number of the Company's shares deemed to be outstanding, include
any shares which may be purchased by any director or Executive Officer of the
Company under the Company's 1984 Non-Qualified Stock Option Plan within sixty
days from March 1, 1995 and any shares which may be acquired by any director or
Executive Officer of the Company upon conversion of the Company's Restricted
Convertible Subordinated Notes within sixty days from March 1, 1995. Common
Stock which is referred to as "beneficially owned" also includes any shares
owned by a spouse or minor child and any shares over which the individual
directly or indirectly holds sole or shared voting or investment power. In
addition, included are shares which have been granted to any director or
Executive Officer of the Company under the Company's Equity Partnership Plans
and a proportionate number of the 1,861,710 unallocated shares, as of March 1,
1995, in the trust under the Equity Partnership Plans which directors and
Executive Officers may direct the trustee of such trust to vote at the Annual
Meeting ("Unallocated Shares"). The Preferred Stock, Series A, as owned by
Berkshire and deemed owned by Mr. Buffett, comprises 100% of the class
outstanding and 14.8% of the outstanding voting power of the Company. All
directors and Executive Officers as a group (15 persons) own 100% of the
Preferred Stock, Series A, 7.5% of the Common Stock and 21.2% of the outstanding
voting power of the Company. Except for Mr. Buffett, no individual nominee for
director beneficially owns as much as 1.0% of outstanding Common Stock or voting
securities having 1.0% of the outstanding voting power of the Company.
<TABLE>
<CAPTION>
TITLE OF SHARES
CLASS BENEFICIALLY
OF STOCK OWNED
-------------------- --------
<S> <C> <C>
Dwayne O. Andreas........................................ Common (1)
Jerome H. Bailey......................................... Common 18,459(5)
Warren E. Buffett........................................ Common 6,633,600(2)
Preferred, Series A 700,000(2)
Robert E. Denham......................................... Common 25,166(5)
Claire M. Fagin.......................................... Common 405
Andrew J. Hall........................................... Common 351,128(6)
Gedale B. Horowitz....................................... Common 447,944(3)(4)(5)
John G. Macfarlane....................................... Common 86,181(5)
Deryck C. Maughan........................................ Common 322,075(3)(5)
William F. May........................................... Common 4,539
Robert H. Mundheim....................................... Common 16,565(5)
Charles T. Munger........................................ Common -- (7)
Louis A. Simpson......................................... Common 25,000
Robert G. Zeller......................................... Common 11,450
15 Directors and Executive Officers as a Group........... Common 7,944,648(8)(9)
Preferred, Series A 700,000
</TABLE>
- -------------
(1) Subsequent to March 15, 1995, Mr. Andreas acquired a beneficial interest,
through an investment partnership, in 100,000 shares of Common Stock. These
shares are not reflected in the Table.
(2) With respect to voting securities which may be deemed to be beneficially
owned by Mr. Buffett, see footnotes (1) and (2) to the Table above on Page
6.
(3) Shares beneficially owned include shares subject to options granted under
the Company's 1984 Non-Qualified Stock Option Plan which may be exercised
within sixty days from March 1, 1995 as follows: Mr. Horowitz 106,700 and
Mr. Maughan 54,600.
7
<PAGE> 11
(4) Shares beneficially owned include shares into which the Company's
Restricted Convertible Subordinated Notes (see "Certain Transactions" below
at Page 15) may be converted within sixty days from March 1, 1995 as
follows: Mr. Horowitz 329,429.
(5) Shares beneficially owned include Unallocated Shares as follows: Mr. Bailey
1,395, Mr. Denham 1,859, Mr. Horowitz 375, Mr. Macfarlane 5,699, Mr.
Maughan 19,467 and Mr. Mundheim 1,339.
(6) Mr. Hall resigned as an Executive Officer of the Company on December 7,
1994 and as a Director of the Company on March 1, 1995. Shares beneficially
owned by Mr. Hall are included in the shares owned by the group.
(7) Mr. Munger is Vice Chairman of the Board of Berkshire. With respect to
voting securities beneficially owned by Berkshire, see footnotes (1) and
(2) to the Table above at Page 6.
(8) Includes 161,300 shares of Common Stock subject to options granted under
the Company's 1984 Stock Option Plan which may be exercised by directors
and Executive Officers of the Company within sixty days from March 1, 1995,
329,429 shares of Common Stock into which the Company's Restricted
Convertible Subordinated Notes may be converted by directors and Executive
Officers of the Company within sixty days from March 1, 1995, 121 shares
owned by a family member in which shares person in the group disclaims any
beneficial interest and 30,256 Unallocated Shares.
(9) Participants in the Equity Partnership Plans generally are entitled to
direct voting of a proportional number of unvoted allocated shares held
under the Equity Partnership Plans. While participants are deemed to have
beneficial ownership of such shares, the Table does not reflect such shares
because the number of such shares cannot be determined.
8
<PAGE> 12
EXECUTIVE COMPENSATION
The following table shows the compensation in 1994, 1993 and 1992 of the
Chief Executive Officer and the four most highly compensated Executive Officers
of the Company who were serving as Executive Officers on December 31, 1994. It
also shows such compensation for Mr. Hall, who resigned as an Executive Officer
on December 7, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------- --------------------- ---------
OTHER ANNUAL RESTRICTED OPTIONS/ LTIP(7) ALL OTHER
BONUS COMPENSATION STOCK AWARD SARS PAYOUTS COMPENSATION(8)
NAME AND PRINCIPAL POSITION YEAR SALARY ($) ($) ($) ($)(6) (#) ($) ($)
- ----------------------------------- ----- ---------- --------- ------------ ----------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ROBERT E. DENHAM................... 1994 1,000,000 0 0 0 0 0 9,170
Chairman and Chief 1993 956,800 368,700 23,912 720,653 0 0 6,655
Executive Officer 1992 999,434 0 103,199(1) 196,788 0 0 5,935
JEROME H. BAILEY................... 1994 250,000 750,000 0 456,821 0 0 6,436
Chief Financial Officer 1993 168,269 558,673 0 150,037 0 0 0
1992 -- -- -- -- -- -- --
ANDREW J. HALL..................... 1994 400,000 600,000 0 0 0 0 9,613,571
President of Phibro Division 1993 400,000 400,000 0 0 0 0 412,818
(Executive Vice President until 1992 400,000 738,000 0 485,532 0 0 74,889
December 7, 1994)
JOHN G. MACFARLANE................. 1994 200,000 800,000 0 456,821 0 0 21,625
Treasurer 1993 150,000 1,238,000 0 802,620 0 19,935 18,856
1992 150,000 1,038,000 3,485 552,595 0 891,832 16,277
DERYCK C. MAUGHAN.................. 1994 825,000 13,000 0 148,010 0 0 36,966
Executive Vice President 1993 400,000 2,600,000 0 3,934,412 0 79,741 26,386
and Chairman and Chief Executive 1992 338,269 1,659,423 294,082(2) 2,682,498 0 3,420,220 17,378
Officer of Salomon Brothers Inc
ROBERT H. MUNDHEIM................. 1994 1,048,000(3) 0 0 275,920(5) 0 0 6,919
Executive Vice President 1993 958,000 0 65,602(4) 317,376 0 0 6,144
and General Counsel 1992 351,538 0 0 25,380 0 0 0
</TABLE>
- ---------------
(1) Includes $96,547 for a temporary residence and other related expenses which
were either paid for or reimbursed by the Company in connection with Mr.
Denham's relocation from Los Angeles to New York.
(2) Includes $283,854 for a temporary residence and other related expenses which
were either paid for or reimbursed by the Company in connection with Mr.
Maughan's relocation from Japan to New York.
(3) Pursuant to his employment contract with the Company, Mr. Mundheim received
$250,000 as base salary and $798,000 as a guaranteed bonus. See "Employment
Contracts and Change of Control Provisions" below at Page 10.
(4) Includes $53,333 for a temporary residence and other related expenses which
were either paid for or reimbursed by the Company in connection with Mr.
Mundheim's relocation from Philadelphia to New York.
(5) Represents market value on date of grant of shares of restricted stock
awarded to Mr. Mundheim under the Company's Equity Partnership Plan for Key
Employees. Such award was based on the Plan's Award Schedule whereunder Mr.
Mundheim's cash bonus of $1,100,000 for 1994 was reduced by $302,000.
(6) Restricted stock awards are shown at market value on the date of grant. The
number and value of the aggregate restricted stock holdings at December 31,
1994 for each of the persons named is as follows: Mr. Denham, 21,022 shares
with a value of $788,325; Mr. Bailey, 15,779 shares with a value of
$591,713; Mr. Macfarlane, 64,456 shares with a value of $2,417,100; Mr.
Maughan, 220,142 shares with a value of $8,255,325; and Mr. Mundheim, 15,152
shares with
9
<PAGE> 13
a value of $568,200. Such restricted stock was awarded to the persons named
under the Company's Equity Partnership Plan for Key Employees ("EPP").
Awards under the EPP represent an unfunded, unsecured promise of the Company
and are generally distributed to participants five years after the date of
grant subject to acceleration in some circumstances and further deferral or
forfeiture in others. The EPP incorporates a dividend reinvestment
structure, pursuant to which the Company contributes an additional 17.65% of
any dividend in order to effect a 15% discount on all dividend
reinvestments. Participants' accounts in the EPP are held in a grantor trust
established by the Company.
(7) These amounts represent residual payouts in 1993 under the Salomon Brothers
Inc Managing Directors' Compensation Plan and payouts in 1992 of deferred
compensation which vested through December 31, 1991 under the Company's 1986
Special Bonus Plan and the Salomon Brothers Inc Managing Directors'
Compensation Plan.
(8) In 1994, Mr. Hall was awarded deferred compensation of $9.6 million. Amounts
reported for 1994 include 17.65% contribution which the Company made in
order to effect a 15% discount on all dividend reinvestments under the EPP
for the named executives as follows: Mr. Denham $2,349, Mr. Bailey $365, Mr.
Macfarlane $5,804, Mr. Maughan $24,145 and Mr. Mundheim $848; also includes
contributions by the Company under the Salomon Brothers Inc Retirement Plan
to the account of each of the named executives as follows: Mr. Denham
$6,750, Mr. Bailey $6,000, Mr. Hall $13,500, Mr. Macfarlane $15,750, Mr.
Maughan $12,750 and Mr. Mundheim $6,000; also includes $71 of term life
insurance premium for each of the named executives which the Company pays.
The amount reported for Mr. Hall in 1993 also includes $400,000 which was
the value on the award date of a deferred compensation plan adopted in 1993
for Mr. Hall's benefit.
The Company made no stock option/SAR grants or awards under long-term
incentive plans in 1994 to any named Executive Officer or any other person.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUE(1)
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)
SHARES ---------- --------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
----------- ---------- ---------- --------------
<S> <C> <C> <C> <C>
JEROME H. BAILEY............................ -- -- -0-/-0- -0-/-0-
ROBERT E. DENHAM............................ -- -- -0-/-0- -0-/-0-
ANDREW J. HALL.............................. -- -- -0-/-0- -0-/-0-
JOHN G. MACFARLANE.......................... -- -- -0-/-0- -0-/-0-
DERYCK C. MAUGHAN........................... -- -- 54,600/-0- $1,029,056/-0-
ROBERT H. MUNDHEIM.......................... -- -- -0-/-0- -0-/-0-
</TABLE>
- ---------------
(1)The 1994 year-end value of the Company's common stock was $37.50. The dollar
value shown in the Table is calculated by determining the difference between the
year-end value of the Company's Common Stock and the exercise price of the
options exercisable at year-end.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL PROVISIONS
In 1992, the Company entered into a guaranteed employment contract with Mr.
Mundheim through December 31, 1995, subject to Mr. Mundheim's earlier
resignation or termination of employment for cause, whereunder Mr. Mundheim
receives an annual base salary of $250,000 and a bonus of $950,000 in 1993,
$1,100,000 in 1994 and $1,250,000 in 1995. The contract also provides for Mr.
Mundheim's participation in the Company's Equity Partnership Plan for Key
Employees.
In 1988, the Board of Directors approved amendments to certain of the
Company's benefit plans, including the Salomon Inc Profit Sharing Plan, now the
Salomon Brothers Inc Retirement Plan, (the
10
<PAGE> 14
"Retirement Plan"), and the 1984 Stock Option Plan. These amendments provide for
the vesting and, under most circumstances, distribution of benefits and credits
made under such Plans upon the occurrence of certain change of control events
not approved by the Board of Directors. Upon such a change of control (as
defined in the Plans), employees will be entitled to receive the immediate cash
payment of the excess of the fair market value (as defined) of a share of Common
Stock over the exercise price of each share covered by an option or a stock
appreciation right under the 1984 Stock Option Plan. Additionally, upon a change
of control, each employee will be entitled to receive an amount not less than
the year-end bonus paid to him in the year preceding the change of control,
prorated for the number of months elapsed up to the change of control, and all
amounts credited to employees' accounts under the Retirement Plan will vest. If
a change of control would have occurred on March 1, 1995, for example, Messrs.
Bailey, Hall, Macfarlane and Maughan would have been entitled to receive at
least the following amounts of cash compensation with respect to 1994 year-end
bonuses (in addition to benefits under the Company's other benefit plans
described above): $125,000, $1,700,000, $133,333 and $2,167, respectively.
[Under Mr. Mundheim's employment contract, payment of his 1995 bonus in full is
guaranteed, subject only to his earlier resignation or termination of employment
for cause.] Moreover, participants in the Equity Partnership Plans would receive
a distribution of all shares allocated to them under the Equity Partnership
Plans in the event of a change of control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1994, the Compensation and Employee Benefits Committee consisted of Mr.
Robert G. Zeller, as Chairman, and Messrs. William F. May and Charles T. Munger.
All of the members of the Committee were non-employees of the Company.
Mr. Munger, a nominee for director of the Company, is Vice Chairman of the
Board of Berkshire. Among the Company's transactions, in the ordinary course of
its business in 1994, Salomon Brothers Inc sold to Berkshire and its affiliates
marketable securities having a value of approximately $3,541,696,000 and
purchased from Berkshire and its affiliates marketable securities having a value
of approximately $2,127,510,000. Additionally, in 1994, Berkshire and its
affiliates paid commissions, fees, service charges and interest of $6,098,677 to
Salomon Brothers Inc in connection with securities transactions. The Company
believes that its transactions with Berkshire and its affiliates are upon terms
which are comparable to those the Company applies in transactions with other
similar customers and counterparties.
In addition, Berkshire and its subsidiaries own substantial equity
positions in a number of other corporations, and have equity positions amounting
to 10% or more of the voting power of Capital Cities/ABC, Inc., The Gillette
Company, GEICO Corporation, USAir Group, Inc., PS Group, Inc., The Washington
Post Company and Wells Fargo & Company. From time to time Salomon Brothers Inc
engages in the ordinary course of its business in transactions with some or all
of such entities as an underwriter of securities, as a broker of or dealer in
securities, or otherwise. Additionally, other subsidiaries of the Company may
engage in transactions with such entities from time to time. The Company
believes that any such transactions are on terms comparable to those on which
the Company deals with other third parties.
In 1987, the Company entered into the Purchase Agreement with Berkshire
pursuant to which affiliates of Berkshire acquired 700,000 shares of the
Preferred Stock, Series A, for $700 million. In the Purchase Agreement,
Berkshire (which for purposes of the Purchase Agreement includes the affiliates
of Berkshire) agreed that (i) Berkshire will not sell any of the Company
securities owned by it to a third party without first giving the Company or its
designee a reasonable opportunity to purchase such securities at the same price
and on the same terms and conditions proposed with respect to an anticipated
sale by Berkshire to a third party; and (ii) if the Company does not exercise
its right of first refusal and buy Company securities which Berkshire
11
<PAGE> 15
proposes to sell, Berkshire will not knowingly sell to any one entity or group
acting in concert Company securities giving such entity or group securities
which amount in the aggregate to over 5% of the Company voting stock outstanding
at the time of the sale. In the Purchase Agreement, the Company agreed to use
its best efforts to nominate and elect Warren E. Buffett and Charles T. Munger,
or two other Berkshire representatives, to the Company's Board of Directors. In
addition, in connection with the distribution by the Company on February 18,
1988 of Preferred Share Purchase Rights to its stockholders, the Company issued
Preferred Share Purchase Rights to the holders of the Preferred Stock, Series A,
on the basis of one Right for each share of Common Stock into which a share of
Preferred Stock, Series A, is convertible, and the holders of the Preferred
Stock, Series A, waived the conversion adjustment they would otherwise have been
entitled to under the terms of the Preferred Stock, Series A.
REPORT OF
THE COMPENSATION AND EMPLOYEE BENEFITS COMMITTEE
The Board's Compensation and Employee Benefits Committee (the "Committee")
makes compensation decisions with respect to the Company's Chief Executive
Officer and other executive officers including Messrs. Bailey, Hall, Macfarlane,
Maughan, and Mundheim.
In 1993 and previous years, the Committee determined the compensation of
senior executive officers in relation to a review of their performance. The
"Million Dollar Limit" imposed by Section 162(m) of the Internal Revenue Code
has caused the Committee to review its procedures with the objectives that
compensation continue to be based on performance and be deductible by the
Company. As a result of this review, the Committee presently intends to preserve
the Company's deduction for compensation paid to the Company's Chairman and
Chief Executive Officer and its other most highly compensated executive officers
by determining total compensation for such persons (other than Messrs. Maughan
and Mundheim, as explained below) based on a performance evaluation, and
providing any compensation in excess of $1 million in a form that will not be
subject to the Million Dollar Limit by deferring the payment of such
compensation. The Committee has determined not to apply a formula at this time
to determine the compensation of these individuals because it believes its
criteria for the evaluation of the performance of these individuals are such
that discretionary, non-formulaic evaluation is preferable.
In measuring financial performance, the Committee has established a
"compensation year" commencing on October 1 and ending on September 30. Using a
"compensation year", rather than the Company's fiscal year which coincides with
the calendar year, permits the Committee to evaluate results for an entire
12-month period in sufficient time to make final compensation decisions in
December of each calendar year.
In October 1994, the Board of Directors of the Company approved a
fundamental change in the way the Salomon Brothers' securities segment
compensates certain managing directors in its Client-Driven Business. This
change is intended to enhance the integration of the different global activities
included in the Client-Driven Business and to create a partnership between
managers and owners. While neither Mr. Denham nor the other most highly
compensated executive officers referred to in this report are directly affected
by this change, the Board's objectives in implementing a new compensation system
influenced the Committee's deliberations with respect to their compensation.
In determining compensation for Mr. Denham and the other executive officers
(except for Messrs. Maughan and Mundheim) in December 1994, the Committee
adhered to the approach of linking the interests of management with those of the
owners by causing the individual manager's compensation to depend primarily upon
his performance in relation to the performance, over time, of the business unit
or
12
<PAGE> 16
function for which he was responsible. Except in the case of Mr. Denham,
salaries were low in comparison to total compensation so that the bulk of
compensation was paid on a performance basis as a year-end cash bonus. This
approach, which is in accordance with industry practice, has the effect of
limiting compensation to reflect poor business performance and increasing
compensation to recognize significant results. Except with respect to Messrs.
Denham and Hall, after the Committee determined the total compensation for each
executive officer, a significant portion of such total compensation was awarded
in Company stock, payable, generally, in five years, under the Company's Equity
Partnership Plan for Key Employees (which generally applies to highly
compensated employees, including Executive Officers). The portion paid in stock
was determined by the Plan's award schedule which can reach 50% or more for
highly compensated employees, except that all of Messrs. Bailey's and
Macfarlane's compensation in excess of $1,000,000 was paid in stock under the
Plan. The market value of the restricted stock awarded each of the four most
highly compensated Executive Officers in 1994 (other than Messrs. Denham and
Hall) is set forth in the Summary Compensation Table in the Company's 1995 Proxy
Statement. Dividends paid on the restricted stock are reinvested for all Plan
participants, including Executive Officers, pursuant to the terms of the Plan.
[See page 9, footnote 6 of this Proxy Statement.]
In addition, the Committee reviewed compensation paid in previous years
(adjusted for an estimate of the current year) by various financial services
companies with which the Company competes, including Bankers Trust Company, Bear
Stearns, Merrill Lynch, Morgan Guaranty and Morgan Stanley. The Committee
anticipated that Mr. Denham's 1994 compensation would be at the lower end of the
competitor range. Bear Stearns, Merrill Lynch and Morgan Stanley are included in
the S&P Brokerage Index referred to in the performance graph set forth in the
Company's 1995 Proxy Statement.
In setting the 1994 compensation of Robert E. Denham, the Company's
Chairman and Chief Executive Officer, the Committee took into account the
Board's evaluation of Mr. Denham's performance in relation to the following
factors (in order of importance):
- Management of the Board of Directors process by insuring that the Board
timely received the appropriate level of information to discharge its
decision-making responsibilities;
- Supervision of the senior officers of Salomon Inc and its major
subsidiaries;
- Supervision of the management of the Company's market and credit risks to
insure that various business units were following appropriate risk/reward
criteria;
- Management of the allocation of the Company's capital to the various
business segments as well as the Company's overall level of capital.
In addition to these criteria, the Committee also considered the Board's
evaluation of Mr. Denham's performance in communicating with creditors and
shareholders, maintaining a positive internal control environment, his role in
special situations and otherwise building shareholder value.
The Committee concluded that, based on their subjective judgment, Mr.
Denham had performed well with respect to each of these factors, meeting or
exceeding their expectations. Taking account, however, of the overall results of
the Company, the Committee determined that Mr. Denham's compensation in 1994
should be set at $1,000,000, or 53.3% of his compensation in the prior year when
the Company achieved record net income. Mr. Denham's compensation was paid as
base salary during 1994. He received no year-end cash bonus. No stock was
awarded to Mr. Denham in 1994 under the Equity Partnership Plan.
13
<PAGE> 17
Mr. Bailey performed well in his first full year as Chief Financial Officer
of the Company. Mr. Bailey's reorganization of the financial division, his
efforts to resolve pre-existing problems resulting from operational systems
migrations and detailed reviews of databases supporting general ledger balances
and his work on establishing a more efficient and flexible distributed
technology environment, were viewed as extremely important contributions. In
addition, Mr. Bailey had provided timely and accurate information to the Board
of Directors and had improved the presentation of financial disclosure documents
to the public.
Mr. Hall's performance at the Phibro Division was viewed in light of that
Division's major contribution to the Company's earnings in 1994. Mr. Hall, an
extremely able and highly experienced commodities trader, added meaningfully to
shareholder value in a year in which the securities segment experienced
difficulties. In addition to his successful commodities trading performance, Mr.
Hall took steps to enhance the flexibility of Phibro Division by creating new
physical trading groups, thereby positioning the Division to take advantage of
future opportunities across a broad and diverse range of markets.
Mr. Macfarlane's performance was viewed by the Committee in both his role
as Treasurer of the Company, in which he maintained excellent external
relationships with regulatory agencies, rating agencies and banks and in his
role in Salomon Brothers' derivatives business. Mr. Macfarlane's compensation,
which reflected the Committee's positive view of his involvement in Salomon
Brothers derivatives activities and his participation as part of the team effort
to reorganize the financial division, was, nevertheless, impacted by overall
negative results at Salomon Brothers.
With respect to Mr. Maughan, the Chairman and Chief Executive Officer of
Salomon Brothers Inc and an Executive Vice President of the Company, the
Committee determined that linking compensation by formula to the performance of
Salomon Brothers will provide an appropriate link between his total compensation
and Salomon Brothers' performance, while at the same time providing the most
effective response to the issues raised by the Million Dollar Limit. Therefore,
effective as of January 1, 1994, the Committee adopted, subject to approval by
the Company's stockholders, which was obtained at the 1994 Annual Meeting, the
Executive Officer Performance Bonus Plan to provide Mr. Maughan an appropriate
performance incentive in a form intended to constitute "performance-based
compensation" pursuant to Section 162(m)(4)(C) of the Code. The basic premise of
the Performance Bonus Plan is that Mr. Maughan's compensation should be
determined by two factors: the return on equity of Salomon Brothers, which he
manages, and the relationship that Salomon Brothers' return on equity has to
that of certain key competitors. [See the competitors listed above at Page 13.]
The Committee certified that, under the formula in the Performance Bonus Plan,
Mr. Maughan was not entitled to any performance bonus for 1994. Accordingly, Mr.
Maughan's compensation consisted of salary and non-formula based bonus, payable
outside the Performance Bonus Plan, which at all times equals $1 million.
Mr. Mundheim's compensation for 1994 was based upon an employment contract
entered into in 1992 to induce him to join the Company as General Counsel. In
approving Mr. Mundheim's employment contract, the Committee had deemed Mr.
Mundheim's prior experience as the Co-Chairman of the law firm of Fried, Frank,
Harris, Shriver & Jacobson, Dean of the University of Pennsylvania Law School
and General Counsel of the U.S. Treasury to be extremely valuable to the
Company.
COMPENSATION AND EMPLOYEE
BENEFITS COMMITTEE
Robert G. Zeller, Chairman
William F. May
Charles T. Munger
14
<PAGE> 18
PERFORMANCE GRAPH
SALOMON INC VS. S&P 500 VS. S&P BROKERAGE INDEXES
Comparison of Five-Year Cumulative Total Return
1989-1994
<TABLE>
<CAPTION>
Measurement Period S&P Broker-
(Fiscal Year Covered) Salomon Inc S&P 500 age
<S> <C> <C> <C>
1989 100.0 100.0 100.0
1990 107.0 96.9 86.4
1991 137.3 125.9 218.9
1992 173.8 135.3 215.1
1993 220.0 148.7 289.2
1994 176.2 150.7 245.1
</TABLE>
Note: Includes the reinvestment of dividends.
CERTAIN TRANSACTIONS
Among the Company's transactions, in the ordinary course of its business in
1994, Salomon Brothers Inc sold to Archer Daniels Midland Company ("ADM") and
entities in which the Company is informed ADM has a material interest marketable
securities having a value of approximately $1,108,769,000 and purchased from ADM
and such entities marketable securities having a value of approximately
$219,266,000. In addition, the Company paid to ADM and such entities net fees of
$242,278 in connection with securities and commodities trading activities. The
Company believes that its transactions with ADM and such entities are upon terms
which are comparable to those the Company applies in transaction with other
similar customers and counterparties. Dwayne O. Andreas, a director and a
nominee for director of the Company, is Chairman of the Board and Chief
Executive of ADM.
15
<PAGE> 19
Warren E. Buffett, a director and a nominee for director of the Company, is
Chairman, Chief Executive Officer and the principal shareholder of Berkshire and
a director of The Coca-Cola Company, Capital Cities/ABC, Inc., The Gillette
Company and USAir Group, Inc. For information regarding the Company's
transactions in 1994 with Berkshire, The Coca-Cola Company, Capital Cities/ABC,
Inc., The Gillette Company and USAir Group, Inc., see "Compensation Committee
Interlocks and Insider Participation" above at Page 11.
Among the Company's transactions, in the ordinary course of its business in
1994, Salomon Brothers Inc sold to Dart Financial Corporation and its affiliates
("Dart") marketable securities having a value of approximately $8,099,576,000
and purchased from Dart marketable securities having a value of approximately
$7,800,091,000. Additionally, in 1994, Dart paid commissions, fees, service
charges and interest of $41,482,407 to Salomon Brothers Inc in connection with
securities transactions. The Company believes that its transactions with Dart
are upon terms which are comparable to those the Company applies in transaction
with other similar customers and counterparties. As of March 1, 1995, Dart
beneficially owned more than five percent of the Company's outstanding Common
Stock, although Dart reported it had sold short an amount of the Company's
Common Stock almost equal to the amount it reported as beneficially owned.
In November 1993, the Company loaned Robert H. Mundheim, an Executive
Officer of the Company, the sum of $900,000 to purchase a residence in New York
City in connection with Mr. Mundheim's planned relocation from Philadelphia. The
loan is interest-free.
On October 1, 1981, the Company and Salomon Brothers, an investment banking
and securities trading partnership, combined their businesses. Pursuant to such
combination, the Company issued an aggregate of $250,000,000 of 9% Restricted
Convertible Subordinated Notes, due October 1, 1991 (the "Notes"), to Salomon
Brothers, which Notes were subsequently distributed to certain of its partners.
Upon issuance, the Notes were convertible, in accordance with their respective
terms, into an aggregate of 18,000,000 shares of Common Stock (adjusted for the
2 for 1 stock split declared in 1983). The conversion period commenced October
1, 1982. On May 4, 1994, the Board of Directors approved an extension, until
October 1, 1997, of the maturity date of Notes held by then-current employees of
the Company, provided that the annual rate of interest on such Notes be reduced
from and after October 1, 1994 to 5.5%. Gedale B. Horowitz, who was a General
Partner of Salomon Brothers prior to October 1, 1981, was a payee of a Note as
of December 31, 1994 in the principal amount of $4,575,406. Mr. Horowitz is a
director and a nominee for director of the Company.
Among the Company's transactions in the ordinary course of its business in
1994, Salomon Brothers Inc sold to GEICO Corporation ("GEICO") and entities in
which the Company is informed GEICO has a material interest marketable
securities having a value of approximately $73,229,000 and purchased from GEICO
and such entities marketable securities having a value of approximately
$10,773,000. In addition, Salomon Brothers Inc earned net commissions and fees
of $190,931 in connection with securities trading activities on behalf of GEICO.
The Company believes that its transactions with GEICO are upon terms which are
comparable to those the Company applies in transactions with other similar
customers and counterparties. Louis A. Simpson, a director and a nominee for
director of the Company, is President and Chief Executive Officer--Capital
Operations of GEICO Corporation.
Since January 1, 1994, Salomon Brothers Inc, as agent or principal, has
handled purchases and sales of securities (including different forms of
repurchase transactions) from time to time for various of the directors and
employees of the Company. The Company believes that such transactions were in
the ordinary course of business, were at substantially the same terms, including
interest rates and collateral, as those prevailing at the
16
<PAGE> 20
time for comparable transactions with other customers and did not involve more
than normal risk of collectibility or present other features unfavorable to the
Company.
2. OTHER MATTERS
The By-Laws of the Company provide that stockholders are required to give
written notice, not less than 30 days nor more than 60 days in advance of an
Annual Meeting of Stockholders, in order to bring business before the meeting or
nominate a person for election to the Board of Directors.
Arthur Andersen LLP served as the Company's independent public accountants
for 1994. Representatives from that Firm will be at the meeting of stockholders,
will be given the opportunity to make a statement if they so desire, and will be
available to take appropriate questions. The Company has not selected auditors
for the current year since, going forward, its normal practice will be for the
Board of Directors to make such selection after mid-year.
At the date of this Proxy Statement, the management has no knowledge of any
business other than that described herein which will be presented for
consideration at the meeting. In the event any other business is properly
presented at the meeting, it is intended that the persons named in the enclosed
proxy will have authority to vote such proxy in accordance with their judgment
on such business.
Stockholders desiring to have any proposal considered for inclusion in
proxy material for the 1996 Annual Meeting of Stockholders should submit such
proposal to the Company not later than November 24, 1995.
By Order of the Board of Directors,
ARNOLD S. OLSHIN
Secretary
March 22, 1995
17
<PAGE> 21
SALOMON INC
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING MAY 3, 1995
P
R The undersigned hereby constitutes and appoints Robert E. Denham, Robert
O H. Mundheim and Arnold S. Olshin, and each of them, his true and lawful
X agents and proxies with full power of substitution in each, to represent,
Y and to vote the shares of, the undersigned at the Annual Meeting of
Stockholders of SALOMON INC to be held in the Salomon Brothers
Auditorium, Seven World Trade Center, New York, New York, on Wednesday,
May 3, 1995 at 10:00 a.m. and at any adjournments thereof on all matters
coming before said meeting.
Election of Directors. Nominees:
Dwayne O. Andreas, Warren E. Buffett, Robert E. Denham,
Claire M. Fagin,
Gedale B. Horowitz, Deryck C. Maughan, William F. May,
Charles T. Munger,
Louis A. Simpson, Robert G. Zeller
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE
PROXY COMMITTEE CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS
CARD.
-------
SEE
REVERSE
SIDE
-------
- --------------------------------------------------------------------------------
S FOLD AND DETACH HERE S
<PAGE> 22
/X/ PLEASE MARK YOUR 0345
VOTES AS IN THIS
EXAMPLE.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be voted FOR election of each nominee.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF EACH NOMINEE.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election
of / / / /
Directors. (see reverse)
For, except vote withheld from the following nominee(s):
- ------------------------------
This Proxy Must Be Signed Exactly as
Name Appears Hereon. Executors,
administrators, trustees, etc., should
give full title as such. If the signer
is a corporation, please sign full
corporate name by duly authorized
officer.
--------------------------------------
--------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
S FOLD AND DETACH HERE S
PLEASE SIGN, DETACH AND RETURN
YOUR PROXY PROMPTLY
